There are currently no formal insurance schemes serving poor households. They often resort to informal borrowings, savings or sale of assets to cushion against shocks like illness, fire or theft.
"Even shocks that would only mildly affect upper- and middle-income households can dramatically reduce the assets of the poor, eliminate their income sources, reduce consumption, and thus adversely affect their ability to improve their welfare," Mayumi Ozaki, an ADB Rural Finance/Microfinance Specialist said in a statement on Thursday.
The Government's insurance schemes for the poor are not based on actuarial principles and are deemed unsustainable without government refinancing.
Private insurance companies also cater mainly to the corporate sector and the urban middle or upper-income groups.
A few micro-finance non-government organizations provide insurance services to members, but these are also largely informal and often subsidized by donor funds.
The technical assistance pr